ASIA LOCAL BONDS-Thai yields fall as auction results cheer

By Saikat Chatterjee

HONG KONG, Nov 11 (Reuters) - Thai local bond yields fell on Wednesday after a 16 billion baht ($480 million) government auction attracted strong demand from banks and foreign investors stepped up buying in the secondary market.

Yields were lower by 2 to 4 basis points across the curve in late trading and expected to consolidate around current levels, dealers said.

An auction of 6 billion baht of 4-year floating rate government bonds fetched an average accepted yield of 1.48917 percent BOT14 on Wednesday, the Bank of Thailand said compared with 1.4610 percent at an auction in September. [ID:nBAK002930]

The bid-to-cover ratio was a comfortable 3.6 times, higher than 1.2 times for a similar auction in September. BOT14-H1

"There was good demand from traders and that is also partly because we have seen foreign investors buying in the bond market so traders are hoping to exit these positions quickly and make a quick buck," said a Bangkok-based trader.

Five-year yields TH5YT=RR were at 3.90 percent, 5 basis points below Tuesday's close, while 10-year yields TH1YT=RR were quoted around 4.40 percent from 4.45 percent.

The Thai baht THB=, seen as a proxy for risk appetite in emerging markets, has gained half a percent since end-October in the same period in which 5-year yields have fallen by more than 15 basis points.

Foreign investors have bought a net 660 million baht so far this month after selling 17.2 billion baht in October. The ICE Futures U.S. dollar index .DXY, a measure of its value against six major currencies, has fallen 1.9 percent so far this month and was trading just above its lowest since Aug. 8.